Groupon now offers reservation-based deals

Carlos Alferez, managing partner of Frontera Grill, acknowledges that he was apprehensive when Groupon approached him about testing a new deal the online discounter wanted to offer.

The James Beard Award-winning Mexican restaurant, founded by Chicago chef Rick Bayless, is packed during peak hours. Alferez initially worried that too many Groupon redemptions during prime dining times could cause chaos and, as a result, disgruntled customers.

And, Alferez said, "You don't want to be seen as a restaurant that needs that kind of thing."

But a change in how Groupons are sold and used won him over. Starting Wednesday, Chicago-based Groupon will allow restaurants to sell time-based deals that should help operators fill tables during slow hours, a struggle for even Chicago's most popular restaurants.

Frontera was ultimately persuaded to participate in the pilot program for the reservation-based deals in April, one of a dozen restaurants in Chicago, because Alferez said he wanted to see if the deal helped lure in younger people during harder-to-fill, late-night hours.

Groupon ? the daily deals site that has been expanding to include other e-commerce services for local businesses ? is today unveiling the latest product in that strategy.

Groupon ? the daily deals site that has been expanding to include other e-commerce services for local businesses ? is today unveiling the latest product in that strategy.

Fifty-eight people used Frontera's Groupon during the pilot period, with 85 percent ages 22 to 35. The average amount spent in addition to the Groupon coupon was $38.89, and seven of 29 tables spent more than $69 on additional food and drinks.

Overall, Frontera said, the Groupon deal generated $1,626.93 in revenue on tables that would have otherwise been empty during 10 days over a two-week period (Frontera is closed Sundays and Mondays).

The restaurant's $69 dinner-for-two deal relaunches Wednesday and is 29 percent cheaper than a full-price dinner.

Julie Szudarek, Groupon's senior vice president of local deals, said the idea for the time-based deal was sparked when merchants repeatedly asked if there was a way to drive customers to them during off-peak hours.

"Frequently, restaurants would say, 'I want to get more customers, but I don't need them at 8 p.m. on a Saturday,'" Szudarek said.

Customers can make a reservation on Groupon's mobile app or website, and the deals are valid only at the scheduled time and date. That means that diners won't have to present the deal at the restaurant.

A spokesman for the online deals company said the time-based deals increase revenue for restaurants by driving customers to slow time slots and by decreasing the likelihood that they'll skip their reservation. Frontera customers, for example, pay for their entrees, two drinks and an appetizer when they purchase the Groupon. Frontera said everyone who bought Groupon deals showed up for their meals.

By the end of the year, Groupon plans to roll out the model to several other "time-based" businesses, including salons, spas and businesses that offer classes or activities.

"Predictability in the restaurant business is hard to come by," Groupon spokesman Bill Roberts said. "You have much more certainty about who's coming in and when."